U.S. Department Of Agriculture Forecasts Higher Food Prices For 2011

The US Department of Agriculture forecasts that food prices in the United States will rise between 2 and 3 percent in 2011, following a 0.8 percent increase in the all-food index from 2009 to 2010. The pressure is from higher commodity prices, supported by rising demand for basic items, such as corn, which is also in demand from the US ethanol industry. As the US economy recovers, CPG manufacturers and retailers are likely to try to pass some of the commodity price inflation through to consumers, which could prompt them to switch to cheaper private label options.  Food represents a much smaller share of the average household expenditure in the US than elsewhere - 6.9 percent in the US against 45 percent in Pakistan. Three percent inflation would add $267 to the average household food bill for a year.